It’s not just academies where related party transactions cause concern
Academy trusts have been criticised when they bung contracts to companies connected to trustees or their associates. Margaret Hodge, former chair of the Public Accounts Committee (PAC), said such related party transactions should be banned because they were ‘just wrong’.
The Education Funding Agency allows such transactions as long as they’re properly procured, recorded in accounts and provided at cost. But the National Audit Office said provision at cost would be difficult to evidence particularly for services.
It’s right that academy trusts should be scrutinised for their related party transactions. It’s equally right that local authority schools with such transactions should also be investigated thoroughly.
Private Eye (No 1432, 25 November) features Conway Primary School, an LA maintained school in Greenwich, with has paid £133,250 for maths consultancy to Digon Consultancy between 2012 and 2015. Digon’s only director is Stephen John Carlsson-Overy, husband of the school’s headteacher Yalini Carlsson-Ruban.
In a letter to parents following concerns about the use of consultants, Carlsson-Ruban said she had not taken part in a decision to hire a consultant where she had a conflict of interest. The decision, she said, had been made by ‘the school’s Assistant Head Teachers and was externally reviewed before the Governors decided to make the appointment’.
The money paid to this consultancy is particularly controversial because the school has decided to make several teaching assistants (TAs) and the School Counsellor redundant. This is despite the staff facing the axe being ‘highly regarded members of the school community, who have played their part in the school’s success over recent years.’
The local branch of Unison which is representing the TAs wants the local authority to investigate spending at Conway school.
Local authority maintained schools are separate entities (unlike academies in multi-academy trusts) but their umbrella LAs have to follow the Code of Practice on Local Authority Accounting. Advice from accountants Grant Thornton says LAs must ensure ‘they have captured all the financial information relating to the school.’ This includes considering which disclosures are required and any ‘governance implications that should be disclosed’ in each school’s Annual Governance Statement.
It’s unclear whether disclosures cover related party transactions. If they do not then this is a loophole which needs plugging. LAs and their schools are responsible for the proper use of taxpayers’ money as are academy trusts. As such, LAs must ensure all spending authorised by governors of LA maintained schools is properly scrutinised and governors reminded of their responsibility to ensure value for money.